My Business is owed a Debt What Are My Rights as a Creditor

When a business’s customer fails to pay his or her debts, the business, as a creditor, has several available remedies to help collect the money from the customer, the debtor.

“Self-Help” Remedies and Collection Agencies: First, the creditor may simply contact the debtor directly and demand payment.  If these attempts fail, the creditor may transfer the debtor’s account to another business whose focus is debt collection. 

Secured Transactions: Secured transactions are sale or loan transactions in which the debtor gives the creditor a claim to the debtor’s property in order to ensure payment of the debt. 

Court-Based Remedies: Sometimes, a creditor will initiate court proceedings in order to collect on a debt.  These include:

  1. Seize Debtor’s Property: In cases involving emergencies, the creditor may be able to seize the debtor’s property even before the court decides the matter.  These are extraordinary measures.
  2. Replevin: In this scenario, a creditor that holds title to property that is the subject of a debt may take that property back if the debt is not repaid. 
  3. Attachment: In an attachment proceeding there is usually a court hearing, after which the court issues an order authorizing the creditor to take the debtor’s property or title to the property.  Like replevin, attachment is available in only extraordinary cases, such as when the debtor is about to dispose of the property.

Lawsuits and Liens:

  1. Lawsuit: If all of the remedies described above fail, the creditor can sue to collect the debt.  The creditor will be entitled to an enforceable judgment if it proves its case or if the debtor fails to contest the claim. 
  2. Lien: Judgment liens can arise if a creditor goes to court to collect on a debt and proves its case, or the debtor fails to contest the matter.  The court will order a judgment in the creditor’s favor in the amount owed to it by the debtor, and the creditor then has a lien against the debtor’s property in the amount of the judgment. 

Collecting unpaid debts is essential to the success of any business. Texas attorney Andrew Weisblatt is a skilled Houston B2B business collections attorney who understands how to effectively collect from businesses that may be reluctant or unable to pay their outstanding financial obligations. To schedule an appointment with Mr. Weisblatt, call our Houston office today at 713-666-1981.

Sources

http://smallbusiness.findlaw.com/business-debt-and-bankruptcy/small-business-debt-collection.html

http://www.avvo.com/legal-guides/ugc/monitoring-and-collecting-your-accounts-receivable

http://smallbusiness.findlaw.com/business-debt-and-bankruptcy/options-when-you-can-t-pay-your-business-debts.html

http://www.nolo.com/legal-encyclopedia/bankrupt-customer-pursue-payment-29574.html

http://smallbusiness.findlaw.com/business-finances/collecting-debts-owed-by-a-bankrupt-customer.html

http://smallbusiness.findlaw.com/business-finances/creditors-rights-and-collection-options.html

http://www.nolo.com/legal-encyclopedia/business-debt-collection-29910.html

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